Ivan runs a small independent movie theatre in Scarborough, which presently attracts 1,100 customers per week at a ticket price of $7. His customer base comprises 750 adult customers and 350 seniors. He would like to increase his total revenue by practising price discrimination. He knows that the demand by adults is fairly inelastic and that a change in the admission price of $1 would change the quantity by 60 customers. He also recognizes that the demand by seniors is fairly elastic and a $1 change in the price would result in a change of 40 customers. Adults Seniors Price Quantity Total Revenue Quantity Total Revenue $2 $ $ 3 4 5 6 7 8 9 a. From this information, complete the table above. b. What is Ivan’s present total revenue? Total revenue: $ c. Should he increase or decrease the price for adults? Should he increase or decrease the price for seniors? Adults: (Click to select) Increase Decrease Seniors: (Click to select) Decrease Increase d. What price will maximize the total revenue from adult customers? Adult price: $ e. What price will maximize the total revenue from seniors? Seniors’ price: $ f. What will be the total revenue from both groups? Total revenue: $ Total revenue from adults: $ Total revenue from seniors: $

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Monopoly

Section: Chapter Questions

Problem 17SQ

See similar textbooks

Related questions

Concept explainers

Question

Ivan runs a small independent movie theatre in Scarborough, which presently attracts 1,100 customers per week at a ticket price of $7. His customer base comprises 750 adult customers and 350 seniors. He would like to increase his total revenue by practising price discrimination. He knows that the demand by adults is fairly inelastic and that a change in the admission price of $1 would change the quantity by 60 customers. He also recognizes that the demand by seniors is fairly elastic and a $1 change in the price would result in a change of 40 customers.

	Adults	Seniors
Price	Quantity	Total Revenue	Quantity	Total Revenue
$2		$		$
3
4
5
6
7
8
9

a. From this information, complete the table above.

b. What is Ivan’s present total revenue?

   Total revenue: $

c. Should he increase or decrease the price for adults? Should he increase or decrease the price for seniors?

    Adults:   (Click to select)   Increase   Decrease

   Seniors:   (Click to select)   Decrease   Increase

d. What price will maximize the total revenue from adult customers?

    Adult price: $

e. What price will maximize the total revenue from seniors?

   Seniors’ price: $

f. What will be the total revenue from both groups?

   Total revenue: $

Total revenue from adults: $

Total revenue from seniors: $

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.